The Global Leader in Workplace Labeling & Signage
By Steve Hudgik
By Neal C. Benson & Timothy J. Hutzel
Reprinted with permission from: the Society of Manufacturing Engineers
Kato Engineering, located in Mankato, Minnesota, has been engineering and manufacturing large electrical generators since 1945. Like many companies, it has been involved in continuous improvement processes to increase its advantage in an evermore competitive market. Kato had made several improvements in the factory that had resulted in significant cycle-time reductions for key product types. As manufacturing cycle times shrank, the need to reduce the upstream order-entry cycle time became obvious.
Kato determined that it was time to apply lean office transformation to enhance the company's lean factory initiative and pave the way for a successful enterprise resource planning (ERP) implementation. Management realized that not leaning the office would result in stalled or regressed factory initiatives. Without a lean office initiative, the situation would compound negatively...archaic, wasteful, manual systems would be automated, resulting in accelerated waste!
Ron Orcutt, Kato's vice president and general manager, spearheaded the project. The impending replacement of a legacy support system with an ERP tool was a key impetus for change. "We knew that automating our current, wasteful processes was not a good investment," Orcutt said. "Our experience in the factory also convinced us that a sound, rational approach could reduce office cycle time."
Even though tools such as value stream mapping helped Kato understand process flow and identify waste, the methods to achieve real change in the office were elusive. The cultural barriers were significant. Employees believed that the "designed to order" products and processes developed through evolutionary knowledge were not in need of repair. "We used our traditional approach to problem analysis and brainstorming solutions," said one Kato office employee. "But when the solutions were implemented, there was little buy in, so very little changed."
It was clear to management that Kato would need a partner to help facilitate the changes. Orcutt renewed an old relationship that proved to be the right fit. MainStream Management, an Iowa-based firm specializing in organizational change and lean, had assisted in implementing lean factory improvements for another Emerson business formerly managed by Orcutt. After several visits to Kato by MainStream personnel, a partnership was established. Kato's desire for change and the passion of key employees had them poised to accept and implement lean office processes. MainStream's focus on the human aspect of leaning processes and sustaining of results was the missing ingredient. An agreement was established to form a "Lean Team" partnership that would result in waste reduction for core office processes during a 12-month period.
To collect specific details of the process, the entire PIT walks each step of the process and asks the person who does that step to actually perform it. Many office processes have hand-offs that cross into the factory. Here the team observes and writes down details of a process step.
MainStream began its approach to successful office lean by first spending sufficient time with the executive staff and coaching them on the formula for sustained results. The formula is straightforward: acceptance by the people involved
in the organization's structure, policies, and culture is of equal or more importance than the exactness of the technical lean solution. If the people and the organization resist the very best lean solution, the process will be neither implemented nor accepted. Thus, understanding the culture and gaining the organization's acceptance of lean was the first step. A multi-point survey was administered to the executive staff, office personnel and factory employees. The survey was designed around the following eight key cultural questions for successful lean implementation:
The survey revealed that the executive staff was the most positive about lean efforts with a score of 52%, followed by the factory employees at 40%, with the office personnel trailing at 34%. (For each group, 100% was the highest possible score.) A steering team, comprised of the executive staff and a newly identified lean leader, would apply its efforts around the eight categories to boost the lean culture and acceptance of lean.
MainStream places a great deal of emphasis on paying particular attention to acceptance by the people and aligning systems and structures to a lean way of doing work. Acceptance of lean is challenged on many fronts of the organization: managers, engineers, sales and marketing personnel, planners, schedulers, buyers, human resource staff, etc. The resistance, when expressed openly, sounds like the following:
Once the details of the process are collected, the PIT lays out a process value stream map. Color-coded cards represent value-added and non-value-added activities, plus hand-offs, quality issues, and PIP (Paperwork In Process), the equivalent of WIP in the factory. Here the team shares the data with the office employees who were not on the team, getting their input, ideas, and buy-in.
The key to acceptance is to allow the resistance to be heard in a safe environment and address it head on. A key finding from the cultural survey was a lack of understanding about lean, as evidenced by the above remarks. All managers and additional key personnel were given lean training. They were also given the opportunity to express their concerns, which were consolidated and addressed by the steering team. Having their concerns addressed greatly increased their acceptance and commitment.
Aligning systems and structures to lean begins by involving the various departmental functions in the lean transition. Kato's steering team consisted of the general manager and his staff for the following areas: engineering, sales and marketing, operations, finance and human resources. Proposed changes to lean had 360-degree visibility and, therefore, dialogue and eventually consensus. The teams implementing lean recommendations were also cross-functional and made frequent status reports to the steering team.
Transforming Kato's office to lean consisted of four phases: planning, leaning, implementing and sustaining.
Phases of Lean Office Transformation
Planning—the planning phase begins when the steering team selects a process targeted for waste reduction. Process selection is formalized to consider the impact leaning will have and the level of cultural acceptance to changing the process. The next step is to select a resource support team (RST) to be accountable to the steering team. This team typically includes the process owner as well as an internal customer and supplier. The first job of the RST is to determine the process definition, process boundaries, and goals of the leaning initiative. Each of these components must be clear and measurable. The RST then selects the process improvement team (PIT), which is a cross-functional team, charged with developing and implementing the lean action plan. The final element of the planning phase deals with training the RST and PIT in lean skills such as mapping, problem solving, developing team chemistry, and functionality issues.
After the PIT had mapped and evaluated the office process for waste and brain stormed ideas for improvement, the team broke up into sub-teams to test their ideas in the workplace. Here team members plan to try out several ideas.
Leaning--the approach to leaning is based on a one-week format. The mission, boundaries and goals must be developed with this time period in mind. During the leaning activity, the PIT is engaged full time in mapping, identifying waste, testing solutions and developing action plans. The RST oversees the work of the PIT, providing resources as needed and direction toward leaning the old process. Mapping process content is a critical element of this phase. The lean mapping technique is visual and categorizes the different activities involved in a process. It focuses on wasteful content.
Implementing—even though the leaning activity can be emotionally taxing for the PIT, both the RST and PIT are reminded that the hardest part of lean office transformation is still ahead. Implementing the lean action plan requires the dedication of all team members. Project management techniques to ensure that tasks are completed on time are a critical component. All team members must participate. Constant focus on both technical and acceptance issues is essential. Barriers must be evaluated to understand causes. Acceptance issues, in particular, must be addressed with a sense of urgency to prevent them from becoming long-term obstacles. Frequent sessions that require the RST and PIT to report progress to the steering team are important to ensure the teams remain accountable for achieving action plan results.
Sustaining—the sustaining phase begins when the steering team approves the process after completion of leaning actions. Evidence that the new process is fully implemented is determined by documentation of process steps, training of employees on the new process techniques, and establishment of data collection and measurement to ensure process stability. If the new process does not function as a standard process, it is not ready to be approved. Upon approval, the process improvement team is dismissed from its duties. This is an opportune time for the team to celebrate accomplishments. The RST continues to monitor the new process by evaluating metrics and staying in close contact with users of the new process. They also conduct periodic audits of the new process.
Once lean ideas are tried out, more data is collected and a new value stream map is generated. The team can then see what impact their ideas had. Here the team lays out its third improvement value stream map. Maximum improvement usually takes five trials.
Data is everything. One year ago, little was known about the processes that Kato has applied lean to. The methodology that has been developed to systematically eliminate waste from processes has resulted in significant change to the processes as well as to the culture. The results shown in this table are typical for office processes that have gone through lean. The challenge going forward is sustainment over time. Kato has not advanced to a lean state; the company continues to transition towards this goal.
In addition to the obvious impact of waste reduction on the processes where lean was applied, lean office transformation activities have left an impression on the people who are the business. "We were skeptical of lean office transformation as a program of the month," said an engineering manager. "Lean was fine for the factory, but we were unsure of how these concepts could apply to our processes. We have learned that there is tremendous power in using cross-functional teams to improve and carry forward implementing the changes."
"Accountability is key," stated a production manager. "The team structure really works because each team and member understands their role in achieving a clear mission and goals. We can see the results in the velocity of cycle-time improvements. The measures of the processes and discipline to sustain improvements prevent the process from drifting back to its former state."
The lean office transformation process has been one of continuous improvement. Much learning has resulted from successes as well as failures. Tools to deal with gaps between processes and methods to address missed opportunities to lean processes have been developed along the way. A number of people from outside the Kato business have been included as team members to bring their talents and perspectives to the leaning work. As Kato moves forward, it is sharing the lessons learned with other Emerson businesses.
Companies without a clear vision of how they want their business to operate struggle with ERP implementation. Learning how to lean business processes prior to ERP implementation helped Kato develop that vision, resulting in an accelerated ERP implementation with less cost, fewer delays, and minimal disruption.
"We don't yet realize all of the impacts of lean office transformation on our business," said Orcutt, who has since been named executive vice president of another Emerson company, "but it has given us a huge advantage as we implement ERP. We also recognize the effect on our culture. Our employees are not only more accepting of change but are more proactive in looking for opportunities to improve process efficiencies." Other businesses within Emerson are acknowledging the results at Kato Engineering and are benchmarking lean office transformation as a best practice.
Neal C. Benson is Lean Leader at Kato Engineering. Timothy J. Hutzel is a Partner at Main-Stream Management, LLC, which can be visited at www.MainStreamLean.com.
Kato Engineering, a part of the Leroy-Somer North America division of Emerson Industrial Automation, is a business of Emerson.
Reprinted with permission from Society of Manufacturing Engineers. Copyright © 2005 Society of Manufacturing Engineers